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Industrial development. Sir, I welcome the Financial Secretary's proposal to reduce the rate of tax on
per cent. corporate profits from 18% to 17%! This, I am sure,
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However, I am disappointed to learn that the Financial Secretary does not wish to increase the capital allowance for expenditure incurred on the procurement of plant and machinery. Sir, it is important that industry should be encouraged to invest more on new technology in order to improve both the quantity and the quality of their production. The level of capital allowance is often a significant factor when an industrial operator decides whether to operate his plants and machiner A higher level of capital allowance will definitely stimulate more investment in production tools, especially in the case of small and medium size industrial undertakings. Sir, I would strongly urge the Financial Secretary to consider an increase on the capital allowance. I further suggest
that the magnitude of increase should be a sufficiently large one in order to produce the desired effect. Sir, the Financial Secretary reported a 26.8% growth in domestic exports in 1987. On the face of it, that represented a very satisfactory rate of growth in the industrial sector in Hong Kong. Such an interpretation, however, must be treated with caution. There has been
a significant amount of processing work done in China. The real monetary benefit to Hong Kong arising from the exports has, consequently, been diminished by significant extent. Hong Kong must not be complacent by this growth figure but must judge its own position on the basis of its competitive edge in production and export in the longer term. Rather sadly, Hong Kong's competitiveness in many areas seems to be eroding over the years, largely
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